Right Hooks

Who Knew? Union CEO-Shamers Are Hypocrites

Not only do union heads throw around bogus numbers, but they make more than your typical CEO.

Business Review Board · May 17, 2017

The AFL-CIO just published its annual hit piece against America’s best-compensated CEOs. The union behemoth worryingly reports that “CEO pay for major U.S. companies has risen nearly 6 percent, as income inequality and outsourcing of good-paying American jobs have increased. According to the new AFL-CIO Executive Paywatch, the average CEO of an S&P 500 company made $13.1 million per year in 2016 — 347 times more money than the average rank-and-file worker.” Investor’s Business Daily (IBD) notes, “That’s up from 123 to 1 in the mid-1990s, and 20 to 1 in the 1960s.”

But as usual, there are some major caveats — and hypocrisy to boot. Two issues — a highly dubious methodology and a damning contradiction — completely undermine the AFL-CIO narrative.

First and foremost, the figure is super-inflated. Economist Mark Perry sets the record straight, writing: “It’s pretty obvious that the AFL-CIO’s approach is to artificially inflate the CEO-to-worker pay ratio for publicity purposes and to generate sensationalized media attention by comparing the total compensation of a small group of the highest paid CEOs in America to the cash-only income of 100 million rank-and-file workers who work an average of only 33.6 hours per week.”

There’s a term for that: cherry picking. To add more clickbait, the study selectively counted only the highest of the high while ignoring everyone else. In fact, by incorporating a fairer, broader and more inclusive measure of CEOs, Perry estimates that the more realistic ratio plummets to 109:1 for part-time workers with no fringe benefits and predominately falls to between 61:1 and 42:1 for full-time workers with fringe benefits depending on hours worked.

Secondly, it’s not like union officials are interested in spreading their own wealth, which — wouldn’t you know it? — actually dwarfs that of the average CEO. According to The Washington Free Beacon, “Leading union officials earned an average salary of $252,370 in 2016, outpacing the average salary of private sector chief executives, according to a new report. The Center for Union Facts compiled the salary information from federal labor filings of 192 of the largest national, state, and local unions. The report found that labor presidents enjoyed nearly a $60,000 advantage over the take-home pay of the nation’s business leaders, who earned an average of $194,350, according to the Bureau of Labor Statistics.”

As IBD observes, “If you use that figure, the CEO-to-worker pay ratio drops all the way down to 5 to 1, which hardly seems shocking at all.” Just another way that hypocritical union heads are hijacking statistics to put their own interests ahead of “the little guy.”

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